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Friday, June 18, 2010

LOS ANGELES, CA – The California Attorney General joined the California
Department of Real Estate and the State Bar of California yesterday, to warn
homeowners about an alarming rise in short sale fraud across California in a
field rife with scam artists.

A short sale is an arrangement in which a homeowner sells his or her home for
less than the outstanding mortgage, with the consent of the lender.Short sale negotiators and agents use a number of titles including debt negotiator, debt resolution expert, loss mitigation practitioner, foreclosure rescue negotiator, short sale processor, short sale coordinator and short sale expeditor.

With so many homeowners now considering short sales, an entire industry of
so-called short sale negotiators has emerged. These individuals solicit
homeowners by promising to expedite the process and help coax lenders into
taking part in the transaction.

The Department of Real Estate is investigating more than 40 complaints of short
sale fraud, up from "virtually zero" cases only three months ago, a
spokesman said.

In April, the Obama administration launched a new initiative called the Home
Affordable Foreclosure Alternatives Program, which encourages homeowners in
financial distress -- especially those who have failed to complete a trial
modification or qualify for a loan modification -- to consider a short sale as
an alternative to foreclosure.

According to the Attorney General, before working with -- or paying -- any
short sale negotiator, homeowners should consider the following red flags:

No license : With limited exceptions, only licensed real estate agents or attorneys can
engage in short sale negotiations with a homeowner's lender.

Up-front fees - Licensed real estate agents wishing to collect up-front fees from homeowners
for short sale transactions must first submit an advance fee contract to the
Department of Real Estate and receive a no-objection letter.

Surcharges - With many distressed properties listed well below market value, negotiators and
agents are charging potential buyers thousands of dollars in surcharges and
hidden fees just to place an offer on a home. These illegal fees are frequently
not disclosed and are paid outside escrow.

Straw buyers and house flippingIn this scheme, short sale negotiators misrepresent the market value of a
property to a homeowner's lender by only submitting offers on the property from
an affiliated straw buyer. After the home is purchased below market value, the
fraudsters immediately flip it and pocket the difference.

Complaints and or for more information:
If you are a homeowner who has been scammed, contact the California Attorney
General’s office at 1-800-952-5225 or
file a complaint online at:www.ag.ca.gov/consumers/general.php.

Non-profit housing counselors certified by the U.S. Department of Housing and
Urban Development are also available to provide free help to homeowners. To
find a counselor in your area, call 1-800-569-4287.

1 comment:

In my opinion, it is always better to contact the lender and apply for a short sale. The borrowers, who are facing severe financial hardship and could not pay their dues for the past 2-3 months, should write a hardship letter to the lender and apply for a short sale. The lender will go through the hardship letter and judge their financial situation and let them know whether or not he would accept the request. I feel this reduces the chances of short sale fraud and also helps the borrower to get rid of the property in a better manner.

Mr. Grundstein’s pursuit of his interests has provided a good diversion frommmaking a living. His education includes liberal arts at the University of Michigan, culinary training and a degree in piano performance. He has traveled on six continents and produced many articles, editorials, social commentaries and books. The subject matter of his works include public affairs, travel, food and the culture of food.

Under duress, he will admit he went to law school and is a state bar member, but found a dignified way to make a living.

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